Lessons from Italy

Last Sunday and Monday we had two events that brought contrasting reactions. On Sunday, it was announced that the two main German parties, the Christian Democrats and the Social Democrats, will be forming a new grand coalition to govern the country in the next four years. The main tenets of this coalition agreement are EU and eurozone reform, to bring the European project forward.

On the same day, Italy had its general election, which did not produce a clear winner as no single political party or grouping commands a majority in either of the two legislative bodies. What the Italian elections did produce was a defeat for the parties that converged towards the centre, while the parties that promoted populist ideas gained ground.

These elections were touted as being a vote on Europe as the parties that promoted populist ideas have for years been critical of the euro and of decisions taken in the corridors of the offices of the European Union. However, it was not so. Research has shown that the two main concerns for the Italians are immigration and unemployment. These two issues determined the way the Italian electorate voted.

In areas where there is high unemployment, Movimento 5 Stelle (the largest single party), made the most gains. In the areas where there are most immigrants, Lega made the most gains.

Thus it was clear the centre left coalition, led by the Democratic Party of Matteo Renzi, and the Forza Italia, led by Silvio Berlusconi, lost votes not because of their pro-Europe stance but because they have not provided an adequate response to the unemployment and the immigration issues. These issues have brought about a sense of malaise that eventually had a very negative impact on the two political parties that have led Italy in the past decade.

The distrust shown towards public institutions and the EU by the Italians is not an intrinsic distrust but the result of the perceived incapability of successive governments to deal with unemployment and immigration. We need to keep in mind that Italy’s economy is still six per cent smaller than it was in 2008 and in the past three years more than 600,000 illegal immigrants reached Italy’s shores.

The job of any government is not only to manage the economy but also to provide direction to the economy

Interestingly enough, the level of negative perceptions that the Italians display towards the EU is lower than the level displayed in France or Austria. In spite of the fact that the two Eurosceptic parties made the most gains when compared to the last election, a strong majority of Italians are in favour of a closer European economic and monetary union with one single currency.

This is where the lessons of Italy need to be learnt, also in Malta. People vote on the basis of their own concerns. This does not make them selfish or individualistic but rational. They choose the party who can best address the issues they feel the country is facing. They choose the party who they believe can meet their individual aspirations.

Eventually, whoever forms the next government in Italy will find this out as well. The Italians do not wish to leave the euro or the EU, even though Italy is the only country where the anti-Europe parties are in a majority.

However, they expect that government solves the perennial unemployment problem. This means have a public administration that supports job creation and not sucks away resources from the productive economy. This means have legislation that promotes the creation of jobs rather than inhibit them.

The lessons we need to learn from Italy can be many. I will limit myself to two. First, governments need to understand the aspirations of the electorate and understand what may cause a threat to those aspirations. It is not only a case of having a strong economy. The benefits of that strong economy must be felt by all.

For example, if a person cannot afford to buy a property, it is useless for that person to be told how much the economy is growing. That person is not feeling the benefits of the country’s economic growth. The answer is not social assistance but policies that reduce economic inequalities.

The second lesson to be learnt from the elections in Italy is that governments need to know how to renew themselves. The traditional political ideologies are a thing of the past. They served us well but are no longer relevant. Political thought needs to catch up with social developments and, more importantly, with economic progress, otherwise it will end up hampering economic progress.

The job of any government is not only to manage the economy but also to provide direction to the economy. Unless this direction is provided, an economy cannot renew itself and continue to thrive.